A Lesson From The Latest News On Paul Tudor Jones

By | August 16, 2016

Bloomberg just reported that Tudor Investment Corp., the hedge fund started by legendary Paul Tudor Jones in 1980 is laying off 15% of its workforce, amid lackluster performance and client withdrawals.

Performance since 2001. Photo Credit: Bloomberg

But if with all I had I still lost, what chance does the green outsider have of winning, or, rather, of cashing in? – Jesse Livermore

So what do we have here? Paul Tudor Jones, featured in Market Wizards (after a five year streak of triple digit returns), who’s been trading since the late 1970s and managed to build a multi-billion dollar hedgefund, has been having problems making money for the past few years.

If you go on social media though, or if you visit trading related websites and forums, you’d be hard pressed to find people who are losing. On the contrary, they make money and many of them are more than willing to share their secrets with you, via courses, DVDs, indicators and so on.

One wonders why, if they’re as good as their Excel tables, photos and testimonials say they are, don’t they help struggling hedgefunders like Paul Tudor Jones? Can you imagine how much they would stand to gain, monetarily and PR-wise?

There’s only one answer: because they’re full of shit. All the smoke and mirrors they’ve created about their experience and performance wouldn’t stand a minimal due diligence process. That’s why they remain in their make-believe world where you can become a successful trader (conveyed meaning: you make money every week) after buying a $300 course.

The real world of trading is much more complex and difficult though. That’s why I’ve been stressing here time and again, look for and learn from actual traders if you want to stand a chance of succeeding in this business.

11 thoughts on “A Lesson From The Latest News On Paul Tudor Jones

  1. BD

    A devil advocate would say:

    * Some strategies do not scale well above a specific size of the fund. For example, strategies which involve illiquid options
    * $300 course no matter how bad it is still can be a reasonable starting point. It is better than going all in in the real account. At very least a course can teach terminology.
    * Strategies which work in one environment (pair trading) or used to work stop working in another environment. * Tudor has charged 2% fee and 10% of the profit. Consider that a manager shall make at least 2% for the clients before the account turns green AND remain in the limits of the contact in terms of Sharpe ratio, delta neutrality, stock/bonds ratio, risk profile and so on. In ZIRP environment this is not an easy trick
    * The Tudor fund(s) was and remains huge. The size of the fund does not left too much ways to make money besides directional macro bets like shorting US treasuries.
    * Paul Tudor was/is a lucky guy. He does not have a real edge and probably never has. He just enjoyed a statistically possible lucky streak. It ended.

    BD

    Reply
    1. William

      300 usd is the price of around 10 books of respectable authors.
      I’m not saying that there can’t be a course that worth 300 usd or more, but most of internet marketers sell hope and dreams, more that actual education, so they overcharge.

      Reply
    1. JLTrader Post author

      According to this article the fees are 2.25% of assets and 25% of profits: http://www.bloomberg.com/news/articles/2016-05-23/tudor-cuts-fees-on-some-hedge-funds-to-keep-investors-on-board
      But most probably there are are several funds with different fee structures. Regarding size, I doubt the $11B is traded as one monolithic block – it’s split between several managers (some of whom just got fired for poor performance, as per the article linked at the start of the post). So a ‘price action authority’ trading on daily bars like Nial Fuller or one who supposedly ran a hedge fund like Chris Capre would be very helpful to PTJ, don’t you think? :))

      Reply
  2. William

    To be honest you can’t compare a multi-billion dollar hedgefund with the trading of a simple guy with an account of 5k usd.

    However you are right that the best practice is to keep skeptical to internet marketers, specially that who do not show a valid performance statement.

    Reply
    1. JLTrader Post author

      The point I was trying to make is that in real trading, no matter who you are and what style of trading you have, you’re going to go through rough patches. This is as true for the guy with $5k as it is for the fund manager overseeing $5B.

      Reply
  3. David

    Do I understand correctly, you are already -10% and it’s like that for a year or so and it seems you can’t climb from it ?

    Reply
      1. Jules Noël

        I’m trying my ‘good luck’ in FOREX for several years and I’m still in red on a yearly basis!
        I agree with David: congratulations for your honesty.

        Reply

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